An entrepreneur who acquired the rights to produce a life-saving drug then increased its price more than 50-fold overnight is defending his decision with assertions that the profits will help create better medicines in future.

Medical organizations protested loudly on Sunday after a company owned by controversial former hedge fund manager Martin Shkreli raised the price of the drug Daraprim, which treats a dangerous parasitic infection, from $13.50 per pill to $750 per pill.

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Shkreli’s startup company, Turing Pharmaceuticals, acquired Daraprim in August. The drug was first developed in the 1940s and is used to treat toxoplasmosis, an infection that is not common but is particularly dangerous and can be fatal when it affects babies born to mothers who have become infected or adults whose immune systems are critically compromised because they are suffering from Aids or some cancers.

The Infectious Diseases Society of America and the HIV Medicine Association sent a joint, open letter to Turing Pharmaceuticals earlier in September, complaining that the sudden, steep price increase for Daraprim was “unjustifiable for the medically vulnerable patient population” and also that it was “unsustainable for the health care system”, according to the New York Times.

On Monday, Shkreli said: “We need to turn a profit on the drug.” He defended the decision by telling Bloomberg News that newer versions of the drug needed to be developed and his was the first company “to really focus on this product” for decades and that such research was extremely expensive.

He also promised: “If you cannot afford the drug we will give it away for free.” Shkreli also said the drug was currently underpriced.

But the move to inflate the price of Daraprim, which is the brand name for the generic drug pyrimethamine and was originally developed in the 1940s by corporate elements of the pharmaceutical giant now known as GlaxoSmithKline, has set off ripples of concern across the medical community.

Doctors may have to provide less effective but cheaper alternatives, said Judith Aberg, at the Icahn School of Medicine at Mount Sinai hospital in New York.

“What is it that they are doing differently that has led to this dramatic increase?” she asked.

It is not uncommon for companies to use inventive interpretations of government regulations and loopholes in the law to corner the market for certain drugs, especially ones that were developed a long time ago and have only a limited market, then relaunch them at higher prices they believe the market will tolerate.

Shkreli has attracted controversy in the past. Consumer rights group Citizens for Responsibility and Ethics in Washington (Crew) has previously called for an investigation of Shkreli’s interactions with the Food and Drug Administration.

• This article was amended on 22 September 2015. An earlier version said that Daraprim was the generic name for pyrimethamine. This has been corrected to say that Daraprim is the brand name for the generic drug pyrimethamine.